Continuing low interest rates and a healthy stream of newcomers will ensure the good times keep rolling in 2015

BY BARBARA YAFFE, VANCOUVER SUN COLUMNIST JANUARY 26, 2015

Photograph by: ian lindsay , Vancouver Sun

Residential construction, and densification, in the Lower Mainland will keep rolling along in 2015.

VANCOUVER — Continuing low interest rates and a healthy stream of newcomers will ensure the good times keep rolling in 2015 for the Lower Mainland’s property development industry. But it also means pricing will continue to pose a challenge.

Three of B.C.’s biggest developers used adjectives like “great” and “incredibly positive” as they delivered a forecast last week to more than 1,100 industry insiders and politicians attending an Urban Development Institute luncheon.

“Vancouver is going to do well, everyone wants to be here,” declared David Negrin, president of Aquilini Development.

He said a recent crackdown on democracy protesters in Hong Kong is likely to enhance Vancouver’s prospects. “We’re very positive on Vancouver, and it’s going to continue for some time.”

Added Neil Chrystal, CEO of Polygon Homes: “We’re picturesque, have a healthy environment, we’re a clean, safe city offering excellent health care and educational opportunities. We are politically stable and close to Asia.

“I see no sign of the residential market slowing down. ... The market will remain balanced and stable in the year ahead.”

B.C. will experience net immigration in 2015 of some 34,600 immigrants and 2,600 provincial migrants, according to research by Mac Marketing Solutions, a company that plans and markets housing projects.

Mac, with offices in Vancouver and Calgary, forecasts that in subsequent years even larger numbers of both immigrants and Canadians will arrive, noting Alberta’s economic slowdown will make heading further west all the more attractive.

So, while a total of 37,200 newcomers are expected this year, the number should grow to 53,200 by 2018.

Combine that trend with low interest rates and a low vacancy rate in the region, and you have a recipe for continuing strong growth in the property development and real estate sectors. Unfortunately, that does not augur well for affordability.

Between 2006 and 2014, benchmark prices for all types of real estate in Metro Vancouver saw significant price jumps, according to Mac research, with the greatest increase — 46 per cent — recorded in Vancouver’s east side. West Vancouver and Vancouver’s west side both saw increases of 41 per cent.

Referencing the retail sector, Kevin Layden, CEO of Wesbild, said North American stores are downsizing as they move online. But even here, Vancouver is well positioned, never having enthusiastically adopted a big-box retail model.

The city has 13 square feet of retail space per capita, compared to a Canadian per capita rate of 19 square feet and the U.S.’s 30 square feet.

Commenting on Vancouver’s affordability crisis, Negrin cited the high cost of land and remarked: “Everyone is frustrated.” The only way to keep prices down is to increase density, he said.

Yet a Demographia study released last week on housing affordability argues density and urban land containment boost housing prices by restricting development of cheaper perimeter lands.

Chrystal argued development is being constrained by an overly complex and time-consuming municipal approval process. At UBC, he reported, the development approval process takes six months, compared to 12 to 30 months elsewhere in the region.

Added Negrin: “We have to find a way to streamline the process. Anything over one year is too long.”

Chrystal pointed to another challenge for Lower Mainland developers — offshore buyers are starting to purchase land for development that he said could lead to oversupply in certain markets.

They are also posing a challenge in terms of what they are prepared to pay for land acquisitions. “They may be parking money from offshore. We can’t compete on price.”

The developers complained of increasing costs for building materials and a stronger U.S. dollar, forcing higher costs. Prices for drywall, windows and steel were cited.

STEADY HOME SALES IN DECEMBER CAP SOLID YEAR FOR FRASER VALLEY REAL ESTATE

(Surrey, BC) – Fraser’s Valley’s real estate market returned to normal activity levels in 2014 with sales of single family detached homes leading the way.

Ray Werger, President of the Board, says, “It was a busy year for both buyers and sellers. In 2014, both sales and new listings were stronger in Fraser Valley compared to 2013 – most notably for detached homes and townhomes – with the result that we’ve returned to normal market activity for our region on par with our 10-year average.”

The Board’s Multiple Listing Service® (MLS®) processed 15,840 sales in 2014, compared to 13,663 the previous year, an increase of 16 per cent. It also received 4 per cent more new listings during the same time period – 30,642 in 2014 compared to 29,338 in 2013. Over the year, the number of active listings for buyers to choose from dropped by 23 per cent going from 7,541 properties in December 2013 to 6,380 in December 2014.

According to Werger, sales during the month of December followed the same trend as every month in 2014 with sales surpassing the same month compared to 2013. “It was the third busiest December we’ve experienced in the last decade with sales almost keeping pace with the number of new listings.

“As a result, we’ve seen our inventory deplete, which is normal for this time of year however, our selection hasn’t been this low for almost eight years. We hope to see the usual influx of new listings during the first quarter of 2015 because we’re currently seeing a shortage of affordably priced single family detached homes in certain areas.”

In December, sales increased by 21 per cent, going from 890 in 2013 to 1,075 last month. New listings increased by 13 per cent in December compared to 2013 going from 1,013 to 1,147.

Home prices in December continued along the same trends as seen for most of 2014, with prices of single family detached homes continuing to rise; townhouse prices remaining steady, and apartment prices decreasing slightly. The MLS® Home Price Index (MLS® HPI) benchmark price of a detached home in December was $573,100 an increase of 4.3 per cent compared to December 2013, when it was $549,500.

The MLS® HPI benchmark price of townhouses in December was $293,500 on par with $293,300 in December 2013. The benchmark price of apartments decreased year-over-year by 0.8 per cent, going from $192,600 in December 2013 to $191,100 in December 2014.

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The Fraser Valley Real Estate Board is an association of 2,757 real estate professionals who live and work in the BC communities of North Delta, Surrey, White Rock, Langley, Abbotsford, and Mission. The FVREB marked its 90-year anniversary in 2011.

(Surrey, BC) – In March, the Fraser Valley Real Estate Board (FVREB) processed 1,259 sales on its Multiple Listing Service® (MLS®), an increase of 12 per cent compared to the 1,128 sales during March of last year, and a 14 per cent increase compared to February’s 1,102 sales.

Ray Werger, President of the Board, says, “We did see activity pick up last month with an increase in demand in particular for single family detached homes. Sales were noticeably higher in North Delta, Mission and Langley compared to last year.

“Last March, sales of detached homes accounted for 55 per cent of sales of our three main residential property types and this year that increased to 58 per cent. It may not sound like much, but that translated into over 100 more sales. The property type that lost ground was townhouses.”

Click on image to see full Fraser Valley stats package.

Werger explains,

“Our main buyers are families looking

for the best value possible by taking advantage

of continuing low interest rates

and stable home prices.”

The most popular price range for single family detached homes in the Fraser Valley last month was between $500,000 and $600,000. The benchmark price of a typical detached home was $563,400, an increase of 3.5 per cent compared to $544,300 during the same month last year.

For townhouses, the benchmark price in March was $297,100, a decrease of 0.4 per cent compared to $298,200 in March 2013 and the benchmark price of apartments was $195,400, a decrease of 4.3 per cent compared to $204,200 in March 2013.

The Board posted 2,799 new listings last month, an increase of 2 per cent compared to the 2,736 posted during March of last year bringing the total number of active listings in March to 8,763 – 8 per cent less than were available during March 2013. Werger adds, “We can’t emphasize enough that real estate is local. What’s happening with the Fraser Valley housing market in general may or may not be happening to the market for your home. Contact your local REALTOR® for detailed market information by community, neighbourhood and property type.”

In March, Fraser Valley’s sales-to-active-listings ratio – a comparison of sales and inventory that measures the health of the market – was 14 per cent for all property types (residential and commercial combined); and, 18 per cent for the three main residential property types indicating stability in the marketplace.

The Fraser Valley Real Estate Board is an association of 2,792 real estate professionals who live and work in the BC communities of North Delta, Surrey, White Rock, Langley, Abbotsford, and Mission. The FVREB marked its 90-year anniversary in 2011.